Tue, Sep 22, 2015 - Page 15 News List

China might limit apps to registered cars and drivers

Bloomberg

China is considering regulations that would force ride-booking apps such as Uber and Didi Kuaidi (滴滴快的) to use commercially registered cars and drivers, and would allow city governments to limit permits for those services, according to people familiar with the plan.

The companies would be barred from offering their services at below cost for the purpose of disrupting competitors, said the people, who asked not to be identified because the proceedings are private.

The proposed rules might be released soon for public consultation, though details could still change, they said.

Huang Xue (黃雪), a Beijing-based spokeswoman for Uber Technologies Inc, said the company does not comment on speculation. Li Min (李民), a spokesman for Didi Kuaidi, said he was unable to comment because the company has not seen any official materials on the regulations.

The proposed framework for governing car-hailing services, while giving them legitimacy, would also challenge their current business model of signing up owners of privately owned cars and matching them with riders. Vehicles that are registered for commercial use have to be scrapped after eight years, and carry higher insurance and tax rates.

The power of local authorities to limit the number of permits for vehicles driving for car-hailing apps may also cap the growth of Uber and Didi Kuaidi, both of which have raised billions of US dollars from investors by pitching rapid expansion in China. The two companies have spent heavily on subsidies for drivers and consumers in attempting to build a following.

Despite being loaded with cash and armed with plans to expand into dozens of cities, the companies continue to operate in an ill-defined area when it comes to enabling privately owned cars to provide paid transportation. That service traditionally has been confined to licensed taxis and rental companies.

The China Business Journal reported yesterday that the number of on-demand vehicles would be left to local authorities to decide.

Both Uber and Didi Kuaidi have repeatedly pledged to operate in accordance with regulations, while lobbying the government to update rules to reflect changing commuter habits.

Didi Kuaidi president Jean Liu (柳青) said this month the difficulties of commuting in Chinese cities have created a “common language” between the company and government officials, who understand that congestion reduces the efficiency and competitiveness of a city.

Uber chief executive Travis Kalanick made clear the company wants to be good partners in China by creating jobs and cooperating with the government.

He called Uber “co-architects in making cities of the future” during a speech in Beijing earlier this month.

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